There’s nothing quite like finding a good family story behind a good company name. There is an undeniable strength to be found in businesses with strong family values and the story of Broadway Bakery Limited and Bakex Millers Limited is the perfect example. We spoke with Managing Director Mr Bimal Sobhagchand Shah.
Broadway Bakery was started in 1958 by the Shah Family in Thika town, which is about 40 kilometres from the Kenyan capital of Nairobi. Initially, it was started with a single deck oven to fire the burner and you had to manually pump in the air. Two of the first generation brothers – Mr Ratilal, who is now 84 years old, and the late Mr Sobhagchand – would go early in the morning to the upcountry to sell the first few loaves of bread daily.
“The price of bread at the time was about 40 cents a loaf,” Mr Bimal reflects. “Eventually, another Collins (3 deck) oven was installed with an additional small mixing machine and rounder. Altogether, the bread and other confectioneries like scones and sweet buns were produced using about 25 sacks of flour a day and these products would be distributed using a fleet of six vehicles.”
Amazingly at the time, bread was new to the small population of Kenya and the brothers had a difficult time convincing the local population to adapt to this new food item.
In 1965, two other brothers – Mr Dalichand and the late Mr Chunilal – joined the business and in 1968 the company was given distribution rights to sell Elliot’s bread, which they continued to do so up to 1977, having increased sales to 25,000 loaves of bread daily. Scones and buns were still manufactured at the small bakery and in 1976 the family’s footprint was expanded as they bought another bakery in Nairobi that was sold four years later.
Due to the rising demand for bread and the lack of supply from Elliot’s, the brothers ventured into putting up their own fully automated bread plant from Bakers Perkins of the UK with a capacity to produce 70,000 loaves per day. Settling upon a new site of four acres of land in Thika, the present factory was constructed in 1979.
“The bread is manufactured using the traditional sponge and dough process, which gives it a unique taste and flavour,” Mr Bimal explains. “This process is still continued even now.”
For the next 10 years, the family continued their massive expansion having installed in 1981 another bread plant from Spooners with the same capacity of 70,000 loaves a day. Thereafter in 1985, a German Werner & Pfleiderer plant to produce 100,000 loaves a day was installed to meet the fast growing demand for bread.
Thanks to this demand, the family held a good share of the bread market throughout Nairobi, Machakos, Meru and Kitui, covering a radius of 120 miles from Thika. At the peak of demand in the late 1990’s, the company was producing approximately 220,000 loaves of bread per day!
In 1979, the youngest brother in the family – Mr Amichand – and the oldest second generation – Mr Bimal – joined the family business. Mr Bimal opted to move from his undergraduate degree at the Chelsea School of Pharmacy to join the National Bakery School in 1977, obtaining a Diploma in Baking with Distinction and was one of the top students in the City & Guilds Exams in 1979. After graduating, he returned back and joined the business and has been instrumental in the expansion and day-to-day management of the factory since then.
“In order to ensure extra capacity and safeguard the market share, a second Werner & Pfleiderer plant was installed in 1995,” Mr Bimal explains. “Production on the Baker Perkins plant has since been stopped, but is still kept as a memorial to the first generation brothers. Later, other second generation family members – Mr Hiten and Mr Bejul – joined the business in preparation for the new millennium.”
THE FLOUR POWER OF BAKEX MILLERS LIMITED
In early 1980, the supply of wheat flour from the few millers in the area was very erratic and the country was facing a wheat flour shortage, so the family applied for a licence to set up its own milling plant.
In 1983, a fully automated 150 metric tons per day Buhler wheat mill was installed along with four bulk storage silos of 1,000 metric ton capacities each at another site in Thika. The milling company was called Bakex Millers Limited. Managed by Mr Hiten, a talented and experienced miller, the company has been supplying wheat flour to Broadway Bakery since then and in 2012, it continued the family trend and expanded by installing a new state-of-the-art 250 metric tons Buhler mill together with extra storage capacity of 8,000 metric tons of wheat in silos.
“The company has a total storage facility of 16,000 metric tons in silos,” Mr Bimal says. “The total investment in 2012 was 6 million Euros and, during 2014, additional storage capacity is being increased by another 8,000 metric tons!”
While Bakex Millers supplies the flour, 75% of the company’s wheat requirement is imported from Canada, USA, Argentina, Russia, the Black Sea and sometimes even Australia. Over the years, the company has had the opportunity to develop strong business relations with major commodity trading groups, such as Louis Dreyfus, Seaboard, Holbud, amongst others. All the wheat is offloaded from the ships at the Grain Bulk Handling terminal in Mombasa and transported by bulk lorries to Thika.
Along with the steady supply of 1,400 metric tons of baking flour a month to Broadway Bakery, Bakex Millers has progressed and expanded steadily in supplying other small bakeries, biscuit manufacturers and the home baking market using its popular Oboma brand. In addition, the company is in the process of introducing new products under the Vitafla and Ungano brands in 2014.
A GENERATION PASS OVER AND NEW PACKAGING
After 2001, all the first generation Shah brothers retired and handed over the running of both the businesses to the second generation. Therefore today, Mr Bimal, Mr Hiten and Mr Bejul are actively involved in running the businesses.
“Broadway Bakery has specialized in the manufacturing of standard white bread, brown bread, premium bread and introduced Seneta sweet bread in 2013, all under the powerful Broadways name,” Mr Bimal tells us. “80% percent of the bread is still open top bread and the rest close top or sandwich bread.”
Owing to the decreasing purchasing power of the local Kenyans, there has been a shift from the normal 400 gram loaf to a smaller 200 gram loaf. Today, the Spooner plant is only dedicated to the manufacturing of the 200 gram loaf.
Broadways bread is packed using wax-coated paper that keeps the bread fresher for a longer period and is more environmentally friendly. In 2001, the company set up its own packaging and converting plant on the same premises. Here, the paper is printed, wax-coated and slit ready for the packaging machines. Keeping this process in house is a prudent measure as nearly 40 metric tons of wax-coated paper is utilized in a month!
“This packaging is the company’s trademark,” Mr Bimal points out.
“With our own fleet of 70 vehicles, we distribute bread every day in the morning from 4 a.m. to more than 200 distributors in all the main towns and we also supply to over 200 supermarket outlets spread in these towns,” Mr Bimal tells us.
Furthermore, the vehicles are all serviced and maintained in the company’s own workshop.
“Due to the nature of the business, the company must ensure that bread is delivered very early in the morning every day of the year,” he continues. “We have a very strong distribution network in all the major towns.”
Both companies support distributors with bicycles, uniforms and advertising materials to promote sales and young Kenyans and SMEs are encouraged to join the distribution network to garner the benefits from it. Distributors also have the added advantage of keeping part of their profits with the company, which can be used for other needs when necessary. The company uses major banks and their branch networks for payment collection and mobile banking.
PROTECTING THE STAFF
“Our total workforce is 420 personnel working in all the sections, which include production, wrapping, transport, sales, printing, maintenance for both plants and transport, administration, supervision and security” Mr Bimal says.
Since the 1980’s, there has been a Workers Union representing the welfare of the staff and collective bargaining agreements have been negotiated every two years since then.
“The company was the pioneer to start the Provident Fund Scheme for its employees in the baking industry, including life cover in the event of death while in employment,” Mr Bimal adds proudly. “The majority of the employees have been in employment for 15 years or more with at least 10 who are still in employment since inception in 1979.”
The company provides employment opportunities to disabled people and, at present, there are three totally blind employees. All staff receive regular medical examinations and training on production and wrapping is all in house on the shop floor to allow for on the job training and development. Graduates are recruited for maintenance through their attachments with the colleges and universities, and in the same vein, administrative staff are all graduates.
“We send some of our staff to seminars to cover new government legislatives,” Mr Bimal says. “The company’s policy is to support employment for local Kenyans and it only has two expatriate staff on its payroll and at the end of the year every employee is given a bonus.”
Many community projects are supported directly by both companies and they have been instrumental in starting the Broadway High School in 1996 where it has been sponsoring needy students with educational fees.
“There is no downside to investing in the next generation,” Mr Bimal insists.
DEVELOPMENT AND FURTHER GROWTH
As competition is growing day by day, the company embarked on a massive advertising campaign in 2013, changing the packaging to a new design and opening new routes and outlets. In late 2013, the company started supplying to the Kisii District, Eldoret and Mtito Andei on the Mombasa route. Furthermore, they are carrying out feasibility studies on which area to set up another manufacturing unit.
New equipment is being installed on the present plants to improve efficiency and reduce wastages. With the third generation of the Shah family ready to join in, they have been given the task of looking into the production of other flour products that would support the milling industry.
“Our family celebrated 100 years of existence in Thika in 2012 and we hope to continue showing our love and commitment to our people and Kenya as a whole,” Mr Bimal concludes.
See BroadWay Bakeries Limited in the March 2014 Edition: